US authorities have recorded more than $30 billion in imports from Colombia over the past decade that do not appear in the South American country’s export statistics.
The gap in trading partner statistics amounts to more than 19% of the $157.9 billion in Colombian imported goods reported by the US Census Bureau (USCB) over the past decade.
The USCB did not report imported services, implying that the discrepancy could be considerably larger.
Gap in reported trade
According to tax agency DIAN, Colombia’s total exports to the United States amounted to $127.5 billion between 2012 and 2021.
This is $30.4 billion less than the imported goods reported by the USCB during the same period.
According to the U.S. Trade Representative (USTR), the goods accounted for just 75% of U.S. imports from Colombia in 2019.
Including services, US imports from Colombia had a total value of $18.7 billion, the USTR boasts on its website.
What doesn’t make sense is that Colombia’s total exports to the United States in 2019 were worth just over $11.5 billion, according to DIAN.
Colombia’s tax authority said last month that its customs division had flagged more than 500 companies suspected of sending invoices for fictitious goods and services overseas since 2012.
Many of the companies reported by DIAN were registered traders in precious metals such as gold.
DIAN’s list is similar to the US Treasury Department’s so-called “central list”, which prohibits trade with 370 Colombian companies suspected of money laundering or funding illegal armed groups.
The main difference is that the US list contains considerably fewer gold companies despite the fact that this metal “is becoming the most important source of funding for illegal armed groups, surpassing even cocaine trafficking”, according to the Department against Transnational Crime. of the United Nations. US States (OAS).
This confirms claims by Interpol and is backed up by claims by the Financial Crimes Enforcement Network (FinCen), which said in November last year that oil extraction also funds illegal armed groups.
According to reports, in conflict zones, environmental crimes, including illegal logging and oil theft, provide about 38% of illicit revenue to armed groups, more than any other illicit activity, including drug trafficking .
The United Nations Office on Drugs and Crime said in June that in Colombia, illegal armed groups (GAO) and organized criminal groups (GCO) were involved in the gold trade and money laundering. silver.
This money laundering was made possible through, among other things, the inflation of invoices for legal gold exports or fictitious export invoices, according to a 2021 report by Global Financial Integrity, which analyzed exports gold between 2010 and 2018.
Colombia claims to have sold $11.7 billion in gold, but the United States claims to have bought $13.9 billion. The $2.2 billion that does not appear did not enter the Colombian economy but remained in a financial hiding place.
Global Financial Integrity Investigator Mario Valencia
In addition, Colombia exports far more gold than it mines, indicating that illegally mined gold is adding to legally mined gold somewhere in the supply chain, according to the agency. OAS Transnational Crime Program.
In 2019, Colombia reported gold exports of around 10 tonnes compared to domestic gold production that year. In previous years, the gap was even more pronounced. This suggests the possible large-scale export of illegal gold and the practice of trade-based money laundering through false invoicing of gold exports from Colombia.
OAS Department Against Transnational Crime
Either way, importers from the United States and other countries send far more money to Colombia than their trading partners actually export.
The UN and OAS reports have focused on the gold trade, which is particularly vulnerable, but money launderers can use any form of international trade for money laundering based on trade.
US Treasury Departments said in 2021 that they believed Colombian transnational criminal organizations (TCOs) received $10 billion a year for their cocaine sales in the United States, mostly through “the peso exchange black market and trade-based money laundering” with their American associates. .
The US Federal Bureau of Investigations (FBI) previously informed the US Congress in 2019 that the US legal economy had been infiltrated by money launderers who were also involved in the gold trade.
The US market plays a key role in the global exchange of precious metals. TCOs use often conscious US companies to exploit US regulations and export illegally mined gold to the US to launder billions of dollars in illicit proceeds from criminal operations in Latin America.
FBI Deputy Assistant Director Regina Thompson
In fact, the FBI has declared that TCOs involved in Colombia’s cocaine and gold exports are “threats to United States national security and international human rights.” after the United States’ Financial Crimes Enforcement Network (FinCen) claimed that “global illegal mining revenues are estimated by international organizations at between $12 billion and $48 billion a year”.
The FBI stressed that the agency “remains dedicated to combating this threat” and is “committed to working with…governments in the region” who consider illegal mining “an important priority.”
That’s easier said than done because “U.S. prosecutors must demonstrate that the underlying crime is specified illegal activity to secure a money laundering conviction,” law enforcement officials said last year. Law Enforcement at the Government Accountability Office of the US Congress.
The alleged involvement of legal mining companies in illegal gold mining further makes “its origin difficult to trace”, they added.
Shell companies like those reported by DIAN in Colombia, shell companies in offshore tax havens, and the transfer of assets through notarial offices further complicate the detection of money laundering rackets.
For example, the main Colombian subsidiary of the Canadian mining company Aris registered its company with a notarial office in Bogota in 2009 before registering with the Superintendent of Industry and Commerce and the DIAN in as a subsidiary of a Panamanian company of the same name.
This construction allows shady investors to actually own a company registered in the name of a leader in Colombia.
A wave of mergers with other mining companies with parent companies in offshore tax havens and contractors operating their mines has turned Aris’ empire into an opaque network of companies in Latin America and Africa.
Subsidiaries of the Canadian holding company in Colombia have been accused of links with crony capitalists and illegal armed groups for more than a decade.
Another problem is that many government officials are more interested in money laundering profits than national security, human rights or fighting crime.
Then-U.S. Department of Justice (DOJ) Inspector General Michael Horowitz found in July 2020 that the Drug Enforcement Administration (DEA) had laundered tens of millions of dollars between 2015 and 2017.
Mary Schaefer, then the DEA’s compliance officer, assured that “significant progress has been made in recent years and efforts continue today” in a response.
In December 2021, however, a DEA agent was sentenced to 12 years in prison for laundering money with a “public official in Colombia” three months after a fellow DEA agent was sentenced to 13 years later. lying in court about his alleged links to drug traffickers.
When my client joined the DEA, he learned to be corrupt, he learned to break the law.
Defense attorney for convicted DEA agent Jose Irizarry
In Colombia, investigations into money laundering associated with drug trafficking and gold exports have also been hampered by corruption.
The prosecutor’s financial crimes official, Luz Angela Bahamon, faces multiple corruption charges, including one linked to an illegal gold smuggling ring.
A study published by Colombian financial risk analysis firm Infolaft in July found that state entities were used to launder money in 21% of cases investigated.
This infiltration of organized crime into government and global commerce has made it virtually impossible to enforce the law against money laundering without shutting down global commerce.